DEALBOOK; ABB Is Said to Be Close to Acquiring a U.S. Maker of Electrical Components

By MICHAEL J. DE LA MERCED

Published: January 30, 2012

ABB of Sweden is near a deal to buy Thomas & Betts, an American maker of electrical connectors, for about $4 billion in cash, a person briefed on the matter said on Sunday.

The deal could be announced as soon as Monday, this person said, cautioning that talks were ongoing and may still fall apart.

Shares of Thomas & Betts closed on Friday at $57.95, giving it a market value of about $3 billion. They have risen 22.6 percent over the past 12 months.

Should the two sides finalize a deal, a takeover of Thomas & Betts would be one of the largest friendly transactions announced so far this year. Bankers and lawyers work to seize upon what they say are improving conditions for deal-making after what they described as a disappointing 2011 for mergers, hurt by the European fiscal crisis.

Among the largest deals announced so far in 2012 are a Japanese consortium's $7.3 billion purchase of the Royal Bank of Scotland's aircraft leasing unit and Eastman Chemical's $3.4 billion takeover of fellow chemical maker Solutia.

ABB, one of Sweden's biggest industrial companies, has made little secret of its desire to grow through ''bolt-on'' acquisitions that supplement existing businesses. Joseph M. Hogan, the company's American chief executive and a former General Electric executive, has said that one of ABB's growth areas will likely be in the United States, which he described in 2010 as on the verge of ''re-industrializing.''

Such a strategy would also give ABB a hedge against prolonged weak demand in Europe.

The company's last major deal was in November 2010, when it purchased another American company, Baldor Electric, for about $3.1 billion.

In Thomas & Betts, ABB will acquire a big maker of industrial electrical components. Thomas & Betts was founded in 1898 and grew as the use of electricity spread across the country. Among its customers are power utilities and construction companies.

The company, which is scheduled to report fourth-quarter earnings on Monday, earned $145.6 million in profit for 2010, atop $2 billion in revenue.

Analysts at Barclays Capital wrote in a research report on Sunday that the deal makes sense for Thomas & Betts, given that the company lacks a clear succession plan for its current chief executive, Dominic J. Pileggi. It also appears to coincide with improving economic conditions in the United States.

''The timing for any such transaction is near perfect into what look like the beginnings of strong upturns in U.S. utility and construction markets,'' the analysts wrote.

Based in Memphis, Tenn., the company has 8,750 employees.

Representatives for ABB and Thomas & Betts could not be reached for comment.

News of the talks was first reported by The Wall Street Journal online.

This is a more complete version of the story than the one that appeared in print.